* Lower U.S. Q3 GDP lifts yen vs dollar * U.S. consumer confidence higher than expected * Higher-yielding currencies such as Aussie dollar fall (Updates prices, adds comment, changes byline) By Wanfeng Zhou NEW YORK, Nov 24 (Reuters) – The dollar fell to a six-week low against the yen on Tuesday after a mixed bag of U.S. data kept worries about an economic recovery alive, enhancing the safe-haven appeal of the Japanese currency. The greenback, however, held steady against the euro as declines in the U.S. stock market dented risk appetite and investors were reluctant to place big bets before the Thanksgiving holiday on Thursday. The U.S. economy grew more slowly than first thought in the third quarter, the Commerce Department said. In another report from the Conference Board, a private research group, the consumer confidence index edged higher, but still pointed to weak sentiment about the labor market. For more, see [ID:nN24296971]. Kathy Lien, director of research at GFT Forex in New York, said the mixed economic reports this morning have “instilled a negative tone across financial markets.” But overall, “the markets are very hesitant to take the dollar to any fresh lows, particularly against the euro and the other key currencies,” she added. In afternoon trading, the dollar fell 0.5 percent to 88.48 yen, after hitting a session low at 88.36 JPY= , the lowest in about six weeks, according to Reuters data. The euro rose 0.1 percent to $1.4975 EUR= , in choppy trading, but fell 0.5 percent to 132.49 yen. EURJPY=R In its second estimate of third-quarter gross domestic product, the Commerce Department said on Tuesday that the economy expanded at an annual rate of 2.8 percent, rather than the 3.5 percent pace it estimated last month. ————————————————————– For a graphic on the impact of U.S. real GDP on the dollar, click on link.reuters.com/wem43g ————————————————————– “This (GDP) number is slightly negative for risk appetite because of the downgrade in the personal consumption number,” said Jacob Oubina, senior currency strategist at Forex.com in Bedminster, New Jersey. Separately, the Conference Board’s index of consumer attitudes increased slightly to to 49.5 in November from 48.7 in October, while the Standard & Poor’s/Case-Shiller index of home prices in 20 metropolitan areas rose 0.3 percent in September. See [ID:nN24297263].  Continued… Read more from the original source: FOREX-Dollar hits 6-week low vs yen on recovery concern (at Reuters)

Read the full story

By Dirk Lammers, The Associated Press Oil prices fell below US$76 a barrel Tuesday with new data showing a slow U.S. economic recovery and consumer confidence that remains lukewarm at best. The dollar also gained against other major currencies, which can keep energy prices in check. Benchmark crude for December delivery fell $1.63 to $75.93 a barrel on the New York Mercantile Exchange. The Commerce Department said the economy grew at a rate of 2.8 per cent between July and September, short of estimates for 3.5 per cent growth released just a month ago. Consumers are not spending much, commercial construction was weak, businesses trimmed inventories. The lack of consumer spending was partly explained in another report released Tuesday. Americans’ confidence in the economy improved slightly in November from October, but shoppers remain gloomy heading into the holiday shopping season, according to the monthly survey released by the Conference Board. The lack of industrial and consumer activity has played out in weekly oil inventory reports from the Energy Department, with supplies of crude in storage growing. The next weekly report arrives Wednesday, and expectations are that crude and gasoline supplies grew again last week. Retail prices edged lower again, falling less than a penny to $2.638 per gallon Tuesday. That’s a lot more than last year at this time, when gasoline prices plunged to about $1.91 as the economic crisis unfolded. Gasoline consumption for the week ended Friday declined 1.6 per cent from the previous week and 1.4 per cent from a year ago, according to the weekly MasterCard SpendingPulse report. Year-to-date consumption for 2009, however, is still up 0.6 per cent. MasterCard’s report is based on aggregate sales activity in the MasterCard payments network, coupled with estimates for all other payment forms, including cash and check. Still, gasoline prices are being supported by crude, which as traded between $76 and $82 for more than a month. That is largely being blamed on the dollar because oil is bought and sold in the U.S. currency. Investors holding euros or other currencies can buy more oil when the dollar falls. Crude prices rose Monday when the dollar fell. On Tuesday, the dollar gained against the euro, yen, and British pound. Oil prices fell as much as 2 per cent. In other Nymex trading, heating oil fell 3.74 cents to $1.942 a gallon. Gasoline for December delivery dropped 3.74 cents to $1.942 a gallon. Natural gas for December delivery rose nearly 10 cents to $4.57 per 1,000 cubic feet. In London, Brent crude dropped $1.10 to $76.36 on the ICE Futures exchange. Read the original: Tepid economic reports and a stronger U.S. dollar send oil prices downward

Read the full story

No big surprises in today’s FOMC minutes.  The Fed sees the economy rebounding and will remain accommodative.  I did find this line somewhat amusing, however: “As in June, nearly all participants judged the degree of uncertainty surrounding their projections of output growth and unemployment as higher than historical norms.” Ben Bernanke’s already broken crystal ball is even more cloudy than usual.  That likely means further dollar devaluation and ultra low interest rates until we recreate the next great financial crisis.  Ben’s reactive  approach continues…. Read the original post: FOMC MINUTES

Read the full story

Tough words from Chinese bank regulators sent the Shanghai Index toppling 3.5% last night and also sent the dollar soaring as investors poured out of the risk trade.  The dollar carry remains a focal point of the rally.  Today’s FX View from IB : A slew of overnight woes concerning the health of banks around the world was limited in its support for the U.S. dollar. One year ago that evidence would have been enough to raise the heartbeat of the bears and send the pre-market futures down by 2%. Today, equity index futures continue to point to another positive North American session and the net impact is to provide a prop for the euro rather than the U.S. dollar. The euro also rose after the strongest reading for 15 months in a poll of investor sentiment. The euro is back to unchanged on Monday’s close at $1.4975. Asian markets felt the full impact of a fresh health-scare for Chinese banks. Shanghai stocks slumped 3.5% overnight after the mainland banking regulator warned banks to meet industry capital requirements or else be prepared to face its sanctions. According to media reports, a source with knowledge of the plans says that at least four Chinese lenders have submitted capital raising plans to regulators. An S&P report used in-house metrics to look at risk-adjusted capital ratios of European banks and served up a warning to several houses including UBS, Allied Irish and BBVA. In the meantime, Lloyds Banking Group announced terms of its attempted largest-ever domestic rights issue with a near-60% discount to where its shares are trading. Finally, WestLB – the state-owned regional German lender is reportedly going to be allowed to fail by its majority owners according to a major Frankfurt-journal. The bank said later that it is in discussions with SoFFin, the German financial market stabilization fund to isolate its toxic assets. Yet while all of the above continues to unwind negative news about the health of the financial sector we have to point out that as much as it is newsworthy today, it’s hardly new news. So some major banks are enacting plans to raise capital. Isn’t this a good thing? It is in our minds. Failure to accomplish the feat could be taken as a negative in the event that these entities fail to attract fresh cash and at the same time prevailing investors walk away. Hence our headline today that risk aversion is taking a back seat. The euro rebounded from an overnight low at $1.4888 after a report showed that German business confidence rose in November to a 15-month high. The IFO institute’s reading of sentiment from 7,000 business executives came in strong with a reading of 93.9 and above the expected 92.5. Third quarter manufacturing demand has boosted prospects for growth especially at a time when inventories were allowed to slip. The most significant component of today’s report comes from the 98.9 reading for expectations about the future for the economy. This confirms what we note above that current perceptions reflect buoyancy after the measures aimed at dealing with the stability of the financial sector. While today’s warnings might be necessary to keep a tight rein on the financial sector, it is ultimately beneficial for the ongoing recovery process. The dollar continues to lose ground against the Japanese yen at ¥88.68 with the yen refusing to cede ground against the dollar after as the initial bout of risk aversion appeared to subside. It very much confirms that the dollar’s loss of status is set to continue. The British pound continues to pare earlier losses against the dollar and is up to $1.6583 from an overnight low at $1.6504. Bank of England data shows a modest rise in the number of mortgage approvals while lending to consumers and businesses dropped again. In a quiet Australian session the Aussie dollar came under some selling pressure, reacting quickly to the latest bout of risk aversion as investors continued to lighten the load somewhat on long Aussie positions. At 92.06 U.S. cents the Aussie is firmly off its overnight low of 91.55 cents. Source: IB Follow this link: RISK AVERSION TAKES A BACK SEAT

Read the full story

* Lower U.S. Q3 GDP lifts yen vs dollar * Firmer Ifo helps euro reverse earlier losses * U.S. consumer confidence higher than expected, (Recasts, updates prices, adds comment, U.S. data) By Gertrude Chavez-Dreyfuss NEW YORK, Nov 24 (Reuters) – The yen rose to six-week highs against the dollar on Tuesday, while the greenback climbed versus higher-yielding currencies after economic growth and consumer confidence data suggested a U.S. recovery could be slower and less robust than previously thought. The reports rekindled the safe-haven allure of both the dollar and yen and reduced appetite for riskier assets such as stocks and commodity currencies with higher yields such as the Australian and New Zealand dollars. Data on Tuesday indicated that the U.S. economy in the third quarter grew at a slower pace than previously thought, while a consumer confidence report still pointed to weak labor market sentiment. “The (consumer confidence) breakdown is less encouraging with the main components that broadly track PCE (in coincident fashion) generally weak,” said Alan Ruskin, chief currency strategist at RBS Global Banking and Markets in Stamford, Connecticut. “That includes the present situation numbers, and the labor market indicators that show jobs hard to get remaining at extraordinary high levels…This has…triggered profit-taking on short dollar exposure.” For U.S. consumer confidence report, see [ID:nN24300840]. The dollar fell to session lows against the yen at 88.36 JPY= , the lowest since early October, according to Reuters data. By mid-morning, the dollar was last at 88.44, down 0.6 percent on the day. The euro, meanwhile, was slightly down at $1.4964 EUR= , in choppy trading. Earlier it had gained versus the greenback as firmer-than-expected German sentiment survey offset concerns about the country’s banking sector. The euro, which has become one of the proxies for risk appetite, also had slipped earlier after data showed the U.S. economy grew 2.8 percent, lower than the government’s first estimate of a 3.5 percent growth rate a month ago. The figure was also slightly lower than market forecasts. For GDP data, click on [ID:nN23258482]. “This number is slightly negative for risk appetite because of the downgrade in the personal consumption number. But overall, this is an old number and it should have limited impact going forward,” said Jacob Oubina, senior currency strategist at Forex.com in Bedminster, New Jersey. In line with the market’s diminished market appetite, the Australian dollar fell 0.6 percent to US$0.9180 AUD= , while the New Zealand dollar slid more than 1 percent to US$0.7252 NZD= . (Editing by Diane Craft)) ((gertrude.chavez@thomsonreuters.com; +1 646 223 6322; Reuters Messaging: gertrude.chavez.reuters.com@reuters.net)) The rest is here: FOREX-Yen rises to 6-wk high vs dollar; high-yielders fall (at Reuters)

Read the full story

NEW YORK (AP) — Stocks retreated from 13-month highs after a lackluster reading on consumer confidence and a report showing slower economic growth sapped the market’s optimism. Major indexes were slightly lower Tuesday after the Conference Board said its Consumer Confidence Index increased to 49.5 in November from a revised reading of 48.7 in October. While better than expected, the report shows that consumers remain gloomy heading into the holiday season. A reading above 90 means the economy is on solid footing. Stocks had already been falling in morning trading after the government revised its calculation of third-quarter economic growth down to 2.8 percent from its original estimate of 3.5 percent, the latest sign that the recovery is likely to be slow and bumpy. The decline in stocks came after a big rally on Monday carried the Dow Jones industrials up 133 points to their highest level in just over a year. A weakening dollar and an upbeat report on housing lured investors back into stocks after a three-day losing streak. The dollar bounced back on Tuesday, hurting stock market sentiment. The dollar’s weakness has been a big driver behind higher stock prices this year. Investors have been taking advantage of record-low interest rates to invest in assets other than cash that can earn them better returns. As the end of the year approaches, however, investors have become hesitant to take on more risk and potentially upset the big gains they’ve amassed since stocks began rallying in March. That desire for safety helps push up the dollar and other safe-harbor investments like Treasurys at the expense of the stock market. The Dow fell 22.68, or 0.2 percent, to 10,428.27. The Standard & Poor’s 500 index lost 1.03, or 0.1 percent, to 1,105.21, while the Nasdaq composite index fell 8.63, or 0.4 percent, to 2,167.38. About two stocks fell for every one that rose on the New York Stock Exchange, where volume came to a relatively low 240.8 million shares, compared with 284.4 million at the same time on Monday. Analysts expect trading to be choppy this week amid light trading volume heading into the Thanksgiving holiday. A report earlier Tuesday showing the fourth straight month of improving house prices in September did little to shore up investor confidence. The Standard & Poor’s/Case-Shiller home price index rose 0.3 percent in September from the previous month. Investors have been battling mixed signals on the economy in recent months. Areas like housing have shown modest improvements, but others like consumer confidence and employment are lagging. That has investors worried that their bets on an economic recovery over the past eight months may have been overdone. The Standard & Poor’s 500 index is up 63.5 percent since early March. A stronger dollar put pressure on the shares of commodities and materials producing companies. When the dollar rises, it makes commodities and commodities-related products more expensive for buyers overseas. The ICE Futures US dollar index, a widely used measure of the dollar against other currencies, rose x percent in morning trading. Oil prices fell $1.24 to $76.32 a barrel on the New York Mercantile Exchange. Gold prices rose slightly. Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.35 percent from 3.36 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.05 percent from 0.03 percent. In other trading, the Russell 2000 index of smaller companies fell 5.41, or 0.9 percent, to 589.40. Overseas, China’s Shanghai index fell 3.5 percent, its biggest decline in three months, while Japan’s Nikkei stock average fell 1 percent. In afternoon trading, Britain’s FTSE 100 rose 0.3 percent, Germany’s DAX index gained 0.1 percent, and France’s CAC-40 slipped 0.1 percent. View original post here: Reports on consumer confidence, GDP tug at stocks (AP)

Read the full story

By Jan Harvey LONDON (Reuters) – Gold prices retreated below $1,165 an ounce on Tuesday as the dollar recovered after a short-lived move lower in the wake of U.S. GDP data, curbing interest in the precious metal as an alternative asset. Prices remain firmly underpinned, however, by the prospect of rising inflation next year and more gold acquisitions by the official sector. Spot gold was bid at $1,163.80 an ounce at 1503 GMT, having risen as high as $1,171.10 in earlier trade, against $1,165.85 late in New York on Monday. In that session it hit a record high of $1,173.50 an ounce. Gold prices have risen 12 percent since the beginning of November, when reports emerged that India’s central bank had bought 200 tons of gold from the IMF. Russia, Sri Lanka and Mauritius have all since also announced gold acquisitions. “If central banks buying gold are diversifying their reserves back from the U.S. dollar to gold or other assets, that is a sign that (investors) should stay long gold and short the dollar,” said Deutsche Bank trader Michael Blumenroth. “As long as the market is thinking there is inflation to be expected next year…central banks are buyers rather than sellers, and there is fresh investment money flowing into the market, there is no way you want to sell gold,” he added. The dollar initially fell against a currency basket on Tuesday after preliminary data showed the U.S. economy grew at a slower pace in the third quarter than previously thought, but later recovered to trade up 0.11 percent. Its recovery has pressured gold from its earlier highs. A near 2 percent drop in oil prices to nearly $76 a barrel ahead of U.S. stocks data later in the session also weighed. However, analysts are confident fresh investment interest in gold will lift it once more. “Definitely prices could still go higher — $1,200 is within reach, and there is no reason why it should not be reached this calendar year,” said Peter Fertig, a consultant at Quantitative Commodity Research. WHOLESALE DEMAND Gold’s correction from record highs in earlier trade led to a pick-up in wholesale demand for the metal in major bullion consumer India, traders said. Any further dips are likely to be met by strong buying, they added. “People are asking for $1,150, we have a few orders at that level,” said a dealer with a state-run bank in Mumbai. Analysts and fund managers say that in addition to dollar weakness, inflation prospects in 2010 and more official sector buying are set to support prices. “The investment case for gold has become increasingly compelling, with central bank buying and a structural change in interest in gold as an investment at the retail level,” Standard Chartered said in a note. The bank said although pockets of dollar strength would likely check gold’s progress in the first half of next year, by the fourth quarter it is set to average $1,300 an ounce. For graphic showing gold’s relationship to inflation expectations, click on: http://feedfetcher.net/wp-content/uploads/2009/11/5382c5cda7FP1109.gif.gif The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,121.457 tons as of November 23, up 3.964 tons from the previous business day and their highest since late June. Silver was at $18.43 an ounce versus $18.59, platinum at $1,450.40 an ounce against $1,454.50, and palladium at $370 an ounce against $369. ETF Securities said its palladium ETP holdings rose more than 13,600 ounces to a record high of 611,924 ounces on Monday. Holdings of its platinum-backed product edged up to 423,439 ounces from 422,762 ounces, also a record high. (Editing by William Hardy) Continued here: Gold retreats below $1,165/oz as dollar recovers

Read the full story

By Jeremy Gaunt, European Investment Correspondent LONDON (Reuters) – World stocks cut some of their losses on Tuesday as Wall Street looked set to open higher, while the dollar gave up early gains and pushed gold to near a record high. Investors were generally taking profits from Monday’s stock rally, which saw U.S. blue chips gain 1.3 percent and European shares 2 percent. Germany’s Ifo business sentiment survey came in more positive than expected, but there was some concern about the banking sector. A German newspaper reported that the majority owners of WestLB were threatening not to support the stricken German landesbank’s requirement for more capital. Rating agency Standard & Poor’s also said on Monday it found most banks in a global study were weakly capitalised, with Citigroup , UBS and Mizuho Financial Group more than two-thirds below the average. MSCI’s all-country word stock index was down 0.2 percent, well off its daily lows, after gaining 1.7 percent on Monday. But the FTSEurofirst 300 index of top European shares reversed losses to stand 0.1 percent higher. “I don’t see any negatives out there. The economic data is good,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin. Some concerns about the U.S. economy were temporarily eased on Monday when data showed sales of previously owned U.S. homes had risen to their highest level in more than 2-1/2 years. Many global stock investors are nonetheless being cautious heading into the year-end, wanting to lock in profits after a very good run in 2009 while also worrying about the true state of the world economy. Earlier on Tuesday, Japan’s Nikkei hit its lowest close in four months, down 1 percent on the day. Japan’s current concerns are focused on worries financial firms will tap the market for equity financing and on a stronger yen hurting the shares of exporters. DOLLAR FIRMS The dollar was flat against a basket of competitors after earlier putting in some gains. It remains down 7 percent for the year, reflecting low U.S. yields on offer. The euro reversed course to stand slightly stronger on the day at $1.4978 and the dollar slipped 0.4 percent to 88.60 yen. Gold reversed as the dollar rose and was selling at around $1,1170 an ounce, about $3 off an all-time peak hit on Monday. Euro zone government bonds rose, with Bund futures at one point reaching their highest level since early October. (Additional reporting by Brian Gorman) Read more: Global stocks weak, dollar flat

Read the full story

By Jan Harvey LONDON (Reuters) – Gold inched up on Tuesday as investors favored it as a hedge against medium-term dollar weakness and possible inflation, but remained below the previous session’s record peak as the U.S. currency edged higher. The prospect of further dollar weakness and more gold buying by the official sector firmly underpinned prices, analysts said. Spot gold was bid at $1,169.50 an ounce at 1221 GMT, against $1,165.85 late in New York on Monday. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $5.50 to $1,170.20 an ounce. Gold prices have rallied 12 percent since the beginning of November, when reports emerged that India’s central bank had bought 200 tons of gold from the IMF. Russia, Sri Lanka and Mauritius have all since also announced gold acquisitions. “Gold has proved over the last couple of days that profit-taking is not lasting very long,” said Peter Fertig, an consultant at Quantitative Commodity Research. “Investors are coming in, especially if the U.S. dollar is under pressure against the major currencies. That is driving the market, as is speculation that another central bank will buy gold.” “Definitely prices could still go higher — $1,200 is within reach, and there is no reason why it should not be reached this calendar year,” he added. Gold hit a high of $1,173.50 an ounce on Monday as the dollar slid against a basket of currencies, boosting interest in the metal as an alternative asset and making it cheaper form holders of other currencies. But prices have been kept in check on Tuesday by a recovery in the U.S. currency. The euro fell against the dollar on banking sector concerns, though it pared losses as a key measure of German business sentiment beat forecasts. WHOLESALE DEMAND Gold’s slight correction from record highs led to a pick-up in wholesale demand for the metal in major bullion consumer India, traders said. Any further dips are likely to be met by strong buying, they added. “People are asking for $1,150, we have a few orders at that level,” said a dealer with a state-run bank in Mumbai. Analysts and fund managers say that in addition to dollar weakness, inflation prospects in 2010 and more official sector buying are set to support prices. For graphic showing gold’s relationship to inflation expectations, click on: http://feedfetcher.net/wp-content/uploads/2009/11/5382c5cda7FP1109.gif.gif “The investment case for gold has become increasingly compelling, with central bank buying and a structural change in interest in gold as an investment at the retail level,” said Standard Chartered in a note. The bank said although pockets of dollar strength would likely check gold’s progress in the first half of next year, by the fourth quarter it is set to average $1,300 an ounce. The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,121.457 tons as of November 23, up 3.964 tons or 0.4 percent from the previous business day. Among other precious metals, spot silver was bid at $18.62 an ounce against $18.59, platinum was at $1,453.50 an ounce against $1,454.50, and palladium was at $372 an ounce against $369. ETF Securities, which operates exchange-traded products that issue securities backed by physical commodities, said its palladium ETP holdings rose more than 13,600 ounces to a record high of 611,924 ounces on Monday. Holdings of its platinum-backed product edged up to 423,439 ounces from 422,762 ounces, also a record high. (Reporting by Jan Harvey; Editing by William Hardy) Read more: Gold holds near $1,170/oz but dollar caps gains

Read the full story

* Euro down 0.2 pct at $1.4930 EUR= * German Ifo rises; German Q3 GDP unchanged * Risk-taking eases on bank sector concerns * Upside for euro/dollar heavy above $1.5000 By Tamawa Desai LONDON, Nov 24 (Reuters) – The euro fell against the dollar on Tuesday on banking sector concerns but pared losses as a key measure of German business sentiment beat forecasts, triggering optimism the euro zone’s biggest economy was recovering. The German Ifo institute’s business climate index rose to 93.9 in November from an upwardly revised 92.0 in October, and beat forecasts of 92.5. The current conditions index rose to 89.1 from 87.4 the previous month, and beat expectations of 88.0. [ID:nBAE003692] Separate data showed Germany’s economy grew 0.7 percent in the third quarter, unchanged from a preliminary estimate. “The economic recovery is continuing and we expect growth to maintain its high momentum in the fourth quarter,” said Ralf Umlauf, economist at Helaba. “Despite the improvement, the Ifo Index is still at a moderate level, historically. We therefore do not infer that there will be pressure on the European Central Bank to herald a change in interest rate policy in the immediate future.” Earlier, the euro was hurt on a German media report the majority owners of WestLB [WDLG.UL] were threatening not to support the stricken German landesbank’s requirement for more capital, citing financial sources. [ID:nGEE5AN07U] Worries about the global banking system, including a report published on Monday by U.S. ratings firm Standard and Poor’s which raised concerns about the health of some major banks [ID:nGEE5AM11I], prompted investors to pare back on riskier assets. “Rallies on risk assets are showing diminishing returns, and major currencies are looking stretched against the dollar,” said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ. European shares were down 0.7 percent .FTEU3 while the bank sub-sector of the DJ Stoxx 600 .SX7P fell 1.6 percent. By 0943 GMT, the euro was down 0.2 percent on the day at $1.4930, after falling as low as $1.4889. It hit a one-week high of $1.5001 on Monday.  Continued… The rest is here: FOREX-Euro down but pares losses on German Ifo (at Reuters)

Read the full story

By Jeremy Gaunt, European Investment Correspondent LONDON (Reuters) – Financial markets did a quick about-face from the previous session’s patterns on Tuesday with stocks falling, the dollar recovering some losses and gold dropping back a bit from record highs. Investors were generally taking profits from Monday’s stock rally, which saw U.S. blue chips gain 1.3 percent and European shares 2 percent. There was also some concern about the banking sector. A German newspaper reported that the majority owners of WestLB were threatening not to support the stricken German landesbank’s requirement for more capital. Rating agency Standard & Poor’s also said on Monday it found most banks in a global study were weakly capitalized, with Citigroup , UBS and Mizuho Financial Group more than two-thirds below the average. MSCI’s all-country word stock index was down 0.6 percent after gaining 1.7 percent on Monday. The volatile Chinese market was down nearly 3.5 percent. Market analysts said there was little surprise that some profit taking was taking place. But they remained relatively bullish about the future. “China is down after a strong run,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin. “But we’re still in a cyclical bull market.” The FTSEurofirst 300 index of top European shares was down 0.7 percent. Earlier, Japan’s Nikkei hit its lowest close in four months, down 1 percent on the day. Japan’s current concerns are focused on worries financial firms will tap the market for equity financing and on a stronger yen hurting the shares of exporters. Many global stock investors are being cautious heading into the year-end, wanting to lock in profits after a very good run in 2009 while also worrying about the true state of the world economy. Some concerns about the U.S. economy were at least temporarily eased on Monday when data showed sales of previously owned U.S. homes had risen to their highest level in more than 2-1/2 years. DOLLAR FIRMS The dollar was broadly higher after a bit of a battering on Monday while the euro fell on the German media report about WestLB. The U.S. currency was up 0.4 percent against a basket of competitors . It remains down 7 percent for the year, reflecting low U.S. yields on offer. The euro was down 0.4 percent at $1.4905 and the dollar slipped about the same to 88.65 yen. Gold slipped on the stronger dollar and was selling at around $1,164 an ounce, about $9 off an all-time peak hit on Monday. Euro zone government bonds rose, with Bund futures reaching their highest level since early October. (Additional reporting by Brian Gorman; editing by Chris Pizzey) (To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Hub click on http://blogs.reuters.com/hedgehub) See the rest here: Bank worries, profit-taking hits stocks

Read the full story

FRANKFURT (AP) — The euro fell against the dollar in European morning trade Tuesday as investors moved back to the safety of the American currency after declines in Asian equity markets. The euro bought $1.4902 compared with $1.4973 late Monday in New York. The British pound also fell, buying $1.6530 compared with $1.6621 while the dollar slid to 88.61 Japanese yen from 89.02 yen late Monday in New York. Japanese shares fell to a new four-month low Tuesday, after overnight gains on Wall Street amid growing pessimism over a recovery in the world’s No. 2 economy. The benchmark Nikkei 225 stock average dropped to its lowest point since July 17. Sentiment in Tokyo also turned downbeat because of a strong yen, which pressures Japanese exporters by eroding their overseas profits. “Yesterday’s dollar slide was halted just above the previous lows, after Tokyo shares fell on concerns that Japanese banks will sell more shares to replenish capital,” Michael Hewson, a currency analyst at CMC markets, said in a Tuesday research note. Hewson said the euro versus the dollar didn’t break the $1.50 mark Monday and failure to gain a foothold above that key level doesn’t bode well for the euro, which could next fall to the $1.4800 to $1.4810 level. Hewson said, however, that if the euro moves higher than the $1.5060 to $1.5070 level, than currency markets could target the euro going as high as $1.5290. Investors will be looking to Germany’s Ifo economic sentiment survey later Tuesday for an indication on the direction of Europe’s largest economy. Read the original: Euro falls to $1.4902 in European morning trade (AP)

Read the full story

Excellent reading here from Yale University.  Their conclusions are interesting & summarized here (entire paper attached below): 1. Assuming no major changes in federal government tax and spending policies, the federal debt as a percent of GDP rises to about 75 percent by 2020. This rise is similar to that of the CBO (2009b) and Auerbach and Gale (2009), although in the present case all the macroeconomic endogeneity has been accounted for. 2. A depreciation of the dollar leads to inflation, as expected, but this is of only modest help regarding the debt problem. It does not appear that the United States can inflate away its debt problem. The picture is worse regarding output if there is a flight from U.S. stocks as well as the dollar. 3. Personal income tax increases and transfer payment decreases have similar effects on the economy. A tax increase or spending decrease of 4 percent of nominal GDP is enough to solve the debt problem. The real output cost is about $300 billion per year. 4. A national sales tax is more contractionary in the model than are personal tax increases and transfer decreases, due in large part to decreases in real wealth and real wages. A national sales tax thus does not look like a good idea, although there is more uncertainty here regarding the ability of the model to deal with this case. 5. In the estimated interest rate rule of the Fed both inflation and unemployment matter, and so the Fed’s response to shocks depends on how these two variables are affected. The effects of interest rate changes on the economy are not large enough in the model to have the Fed come close to offsetting the effects of shocks. For example, much of the output costs to tax increases or spending decreases seem unavoidable. Link: THE PROBLEM OF DEFICITS

Read the full story

SINGAPORE (AP) — Oil hovered below $78 a barrel Tuesday in Asia amid mixed signs about the global economy and crude demand. Benchmark crude for January delivery was up 16 cents to $77.72 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 9 cents to settle at $77.56 on Monday. Investor optimism was buoyed by a report Monday from the National Association of Realtors that October home sales rose more than 10 percent, suggesting strength in the U.S. economy. But crude refiner Valero Energy said it shut down a plant last week because demand for oil products such as gasoline has been weak. Crude has bounced between $76 a barrel and $82 for more than a month as a weakening dollar offsets concerns about tepid consumer demand. Oil often trades inversely to the strength of the dollar as investors buy commodities as a hedge against inflation. Societe Generale said weakness in the dollar and expectations of higher inflation have provided for a floor for the oil price, limiting losses. “The ceiling has been set by weak refining margins, lackluster demand and a global economic recovery that is expected to be sluggish,” it said in a report. In other Nymex trading, heating oil was steady at $1.98 a gallon. Gasoline for December delivery held at $1.98 a gallon. Natural gas for December delivery was little changed at $4.47 per 1,000 cubic feet. In London, Brent crude for January delivery rose 20 cents to $77.66 on the ICE Futures exchange. Original post: Oil hovers below $78 as traders eye dollar, demand (AP)

Read the full story

* Dollar rebound seen limited on prospect for low rate policy * Upside for euro/dollar heavy above $1.5000 * Dollar/yen above 6-week low, but downward risks seen * Dollar short-positions being closed in holiday week By Kaori Kaneko TOKYO, Nov 24 (Reuters) – The dollar trimmed losses on Tuesday as Tokyo stocks failed to follow up a stronger day on Wall Street, prompting some to buy the dollar back, and as some investors closed dollar short-positions before the Thanksgiving holiday. Tokyo markets were playing catch-up after a three-day weekend, which saw comments from a senior Federal Reserve official reinforce the widely-held view that the United States will stick to its low interest rate policy for a while, adding to downward pressure on the dollar. But the euro was supported by remarks from European Central Bank President Jean-Claude Trichet who said on Monday that as the economic situation becomes more normal, the focus in the medium term calls for a “gradual and timely” phasing out of quantitative measures. [ID:nGEE5AM1L9] The yen crosses slipped as the Japanese currency found buyers out of Tokyo after the three-day weekend, but trade is expected to be thin and price moves were likely to be exaggerated ahead of the U.S. Thanksgiving holiday on Thursday, dealers said. “With a holiday shortened-week this week, there are still investors who want to close their dollar-short positions,” said Yuji Saito, head of the FX sales department at Societe Generale. The dollar index, a gauge of its performance against six major currencies, rose 0.2 percent at 75.235 .DXY, above a 15-month low of 74.679 touched last week. St. Louis Federal Reserve President James Bullard said on Sunday the Federal Reserve should keep alive its mortgage-related assets purchase programme beyond a planned end-date to stimulate the economy. [ID:nN22246631] The euro was down 0.1 percent at $1.4940 EUR= , after rising as high as $1.5000 on trading platform EBS on Monday. “The euro could rise further given comments from ECB President Trichet, but the upside for the euro is likely to be heavy and it will struggle to rise well above $1.5000,” Saito said. ECB executive board member Jose Manuel Gonzalez-Paramo said on Sunday the central bank could detail plans for phasing out its quantitative easing at the December meeting. [ID:nGEE5AL04Z] The dollar edged down 0.1 percent to 88.88 yen JPY= , having touched a six-week low of 88.57 yen on EBS the previous day.  Continued… Read the original: FOREX-Dollar inches up as Tokyo shares lacklustre (at Reuters)

Read the full story

Chart guru Robert Prechter was on Fast Money this evening, reiterating his comments about extreme declines. He states that bullishness has gone from 2% to 90% (though we’re not sure where that comes from), and that volume and breadth are down. Interestingly, when he was asked about gold, he demurred and said he was “very, very bullish” on the dollar. Visit link: Prechter: Everyone Is Bullish Now, So 2010 Will Be A Year Of Horrible Market Declines

Read the full story

* Fed’s Bullard reaffirms low interest rates view * ECB’s Trichet, Paramo talk about exit strategy * Dollar rises from 6-week low vs yen; Aussie, kiwi gain * U.S. existing home sales surge 10.1 pct in Oct. (Updates prices, adds comment, changes byline) By Wanfeng Zhou NEW YORK, Nov 23 (Reuters) – The dollar fell against a basket of currencies on Monday after comments from a Federal Reserve official reinforced expectations U.S. interest rates would stay low for some time. A rally in stock markets and gains in gold and oil prices also dented safe-haven demand for the dollar and lifted commodity-linked currencies like the Canadian and New Zealand dollars. St. Louis Federal Reserve President James Bullard on Sunday said the Fed should keep alive its mortgage-related assets purchase program beyond a planned end date to stimulate the economy. Investors saw the Fed keeping wider monetary policy accommodative for the foreseeable future. See [ID:nN22246631] “Risk appetite is back … with stocks up globally,” said John Doyle, foreign-exchange strategist at Tempus Consulting in Washington. “Also weighing on the dollar was speculation that the Federal Reserve will keep stimulus measures in place for longer than many expect, ensuring that interest rates remain virtually zero,” he added. Low rates would limit returns on many U.S. investments, prompting investors to diversify out of the greenback and seek other riskier currencies and assets with higher yields. In afternoon trading, the euro was up 0.7 percent at $1.4969 EUR= , after hitting a session high of $1.5001, according to Reuters data. The euro has struggled to stay above $1.50 in recent weeks. Analysts said moves were exacerbated by thin liquidity with Tokyo markets shut and ahead of Thursday’s U.S. Thanksgiving holiday. The euro EURJPY=R rose 0.9 percent to 133.34 yen. The dollar gained 0.2 percent to 89.08 yen JPY= after hitting a six-week low of 88.58 yen, according to Reuters data. An industry report showing U.S. existing home sales jumped to a more than 2-1/2-year high in October further spurred risk appetite and pressured the dollar. See [ID:nN23249040]. “The (housing) data adds to bearish U.S. dollar momentum, as stronger-than-expected home sales data is bullish for equity markets,” said George Davis, chief technical strategist at RBC Capital Markets in Toronto. ECB TO EXIT BEFORE FED?  Continued… Here is the original post: FOREX-U.S. dollar drops on Fed comments, stocks gain (at Reuters)

Read the full story

NEW YORK (AP) — Investors halted stocks’ three-day losing streak Monday, buying across the market on a range of factors including the weaker dollar and better-than-expected home sales numbers. AP – In this Nov. 19, 2009 photo,Traders work on the floor at the New York Stock Exchange in New … {”s” : “cvx,dell,hpq,wy”,”k” : “c10,l10,p20,t10″,”o” : “”,”j” : “”} Major stock indexes soared more than 1 percent in afternoon trading, including the Dow Jones industrials, which touched a new 13-month high. The National Association of Realtors’ report showing a big jump in October home sales revived investors’ optimism after disappointing data on the housing industry last week raised concerns about the strength of the economic recovery. Another drop in the dollar pushed prices for gold, oil and other commodities higher, boosting energy and material stocks. A weaker dollar makes commodities cheaper for foreign buyers, and in turn lifts profits for the companies that produce them. Bond prices retreated as investors regained their appetite for risk. The dollar slumped after James Bullard, president of the Federal Reserve Bank in St. Louis, said the central bank should continue to buy mortgage-backed securities after the program is supposed to expire in March. That would continue to keep interest rates low. Low interest rates and a resulting decline in the dollar have been big drivers behind the stock market’s eight-month rally. Low interest rates enable investors to borrow cheaply and buy assets like stocks and commodities that have the potential to earn higher yields than cash. Investors were buying Monday on somewhat contradictory forces in the market. The strength in housing is a sign of an improving economy, which could argue in favor of raising rates, while the dollar’s weakness points to rates remaining low. Analysts say investors who still have plenty of available cash are primed to buy, and so the market is rising on its own momentum. “There’s still $2 trillion of cash that needs to find its way into the stock market,” said Phil Orlando, chief equity market strategist at Federated Investors. Orlando said investors will continue to look for dips in the rally as a way to get into the market, not wanting to end the year without participating in some of the big gains stocks have made. “Bearish managers are sweating bullets that they’re not going to be able to get that cash in the market and they need to do that,” he said. “That is why any pullback we’ve seen this year has been met with a wave of cash that has pushed stocks up higher.” At the same time, many portfolio managers have cooled their buying, not wanting to risk losing the big returns they’ve made since stocks began rallying in March. Those opposing forces are likely to result in choppy trading over the next few weeks, analysts said, which will be exacerbated by light volume as the holidays approach. The Dow Jones industrial average rose 117.37, or 1.1 percent, to 10,435.53, after losing 120 points over the previous three days. Earlier, the Dow rose as much as 177 points to a new 13-month high of 10,495.61. The Standard & Poor’s 500 index rose 12.88, or 1.2 percent, to 1,104.26, while the Nasdaq composite index rose 25.57, or 1.2 percent, to 2,171.61. About four stocks rose for every one that fell on the New York Stock Exchange, where volume came to a low 560.3 million shares, compared with 714 million at the same time on Friday. Many traders were already on vacation for Thanksgiving, and the decreased volume can contribute to price swings. The ICE Futures U.S. dollar index, a widely used measure of the dollar against other currencies, fell 0.7 percent in afternoon trading. As the dollar fell, gold prices surged to a new high of $1,174 an ounce. Oil prices rose 74 cents to $78.21 a barrel on the New York Mercantile Exchange. The spike in commodities lifted the shares of energy companies and materials producers. Chevron Corp. rose $2.05, or 2.7 percent, to $78.82. Weyerhaeuser Co. gained $1.23, or 3.3 percent, to $39.09. Technology shares also rose sharply, rebounding from losses last week sparked by disappointing outlooks from several big tech firms, including Dell Inc. Dell added 41 cents, or 2.9 percent, to $14.70. Hewlett-Packard Co. added 79 cents to $50.83 ahead of its earnings report, which is due after the market closes. Bond prices fell as investors moved back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.38 percent from 3.37 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.03 percent from 0.01 percent. The yield on the three-month bill briefly dipped into negative territory last week as worries about the economy took hold and investors retreated to safe havens like the dollar and government debt as they sold stocks. Investors wanting to lock in profits as the year comes to a close are willing to earn very little to park their cash in a safe place. “Managers want to finish up the year on a positive note,” said Quincy Krosby, market strategist at Prudential Financial. “It’s not a time for taking chances.” The National Association of Realtors said home sales rose 10.1 percent in October to the highest level in two and a half years, spurred by a tax credit for first-time homebuyers. Analysts had been expecting a 1.4 percent increase in sales. The credit, which was due to end at the end of the month, was subsequently extended into 2010. “You could be completely cynical and say this market is moving up today because volume is low and the dollar is weak, but I would have to add that we’re getting confirmation on the sustainability of the economic recovery by the actual fundamentals,” Krosby said, referring to the housing report. The economic data, though, has largely been mixed. Last week, stocks sold off after an unexpected drop in home construction stirred worries about the strength of the recovery in housing. The Dow ended the week roughly flat, up 0.5 percent, while broader indexes fell. In other trading, the Russell 2000 index of smaller companies rose 10.45, or 1.8 percent, to 595.13. Overseas, Britain’s FTSE 100 rose 1.7 percent, Germany’s DAX index soared 2.4 percent, and France’s CAC-40 jumped 2.3 percent. Markets in Japan were closed for a holiday. See the rest here: Weak dollar, home sales data carry stocks higher (AP)

Read the full story

LONDON (AFP) – The dollar slid against the euro on Monday on concerns that US authorities may prolong emergency stimulus measures, helping push the price of gold to a record high above 1,170 dollars, analysts said. In late morning trading here, the euro climbed to 1.4969 dollars from 1.4860 late in New York on Friday. Against the Japanese currency, the dollar strengthened meanwhile to 89.15 yen from 88.92 yen reached late on Friday. Gold hit 1,174 dollars an ounce in late London trading. It later pulled back to 1,169.50 dollars. “Gold reached new highs as the dollar continued its decline,” said ODL Markets analysts in a note to clients. Gold is regarded as a safe-haven investment and typically strengthens when the dollar is weak, since the dollar-priced metal attracts buyers when it becomes cheaper for holders of stronger currencies. The dollar’s slide was driven by comments from a US Federal Reserve official that he would prefer to keep the central bank’s asset-buying programme active beyond its current cut-off date, analysts said. Federal Reserve Bank of St. Louis President James Bullard said an extension of the programme, widely considered a negative factor for the US currency, would give more flexibility to US policymakers. “Central bank rhetoric provided fresh incentive” to drive up the euro, said Jane Foley, analyst at online trading firm Forex.com. “Gold prices printed another fresh high on the back of dollar weakness with Bullard’s comments promoting the discussion of medium-term inflation potential,” as low interest rates could cause upward pressure on prices. Julian Jessop of Capital Economics wrote in a note: “The latest surge in the price of gold could be justified by the desire for insurance against the risks of inflationary bubbles developing in other assets, as well as a collapse in the US dollar.” Foley added however that “economic data continues to indicate an absence of price pressures.” The dollar’s fall came after it succeeded in rising last week as investors shunned assets viewed as risky, such as the euro, following declines on world stock markets triggered by fresh worries about the economic outlook. However, global stock markets rose sharply on Monday as the dollar weakened. Over the weekend meanwhile, Indian Prime Minister Manmohan Singh poured cold water on talk of dropping the dollar as the key global currency and voiced confidence that the US economy would make a strong recovery. Jessop expected “gold prices to fall back in the coming months as the US currency recovers some ground.” In London on Monday, the euro was changing hands at 1.4969 dollars against 1.4860 dollars late on Friday, at 133.45 yen (132.16), 0.9015 pounds (0.9002) and 1.5114 Swiss francs (1.5119). The dollar stood at 89.15 yen (88.92) and 1.0097 Swiss francs (1.0174). The pound was at 1.6606 dollars (1.6503). On the London Bullion Market, the price of gold surged to 1,169.50 dollars an ounce from 1,140 dollars an ounce late on Friday. More: Sliding dollar drives gold to record high

Read the full story

LONDON (AFP) – Gold prices soared to a record 1,174 dollars an ounce here on Monday as a sliding US currency and worries about a possible spike to inflation increased demand for the “safe-haven” metal, traders said. Gold hit exactly 1,174 dollars an ounce in late trading on the London Bullion Market. It later pulled back slightly to stand at 1,170.32 dollars. “Gold reached new highs as the dollar continued its decline,” said ODL Markets analysts in a note to clients. The dollar slid against the euro Monday on concerns that the Federal Reserve may keep emergency stimulus measures in place for a while longer, traders said. Comments by a US Federal Reserve official that he would prefer to keep the central bank’s asset-buying programme active beyond its current cut-off date pushed the dollar lower, analysts said. Federal Reserve Bank of St. Louis President James Bullard said an extension of the programme, widely considered a negative factor for the US currency, would give more flexibility to US policymakers. “Central bank rhetoric provided fresh incentive” to push the dollar lower, said Jane Foley, analyst at online trading firm Forex.com. “Gold prices printed another fresh high on the back of dollar weakness with Bullard’s comments promoting the discussion of medium-term inflation potential, though economic data continues to indicate a absence of price pressures,” Foley added. Continue reading here: Gold hits record high 1,174 dollars

Read the full story

Today’s FX View from IB : St. Louis Fed President, James Bullard said in a speech over the weekend that the Fed should retain the flexibility to respond through continued purchases of mortgage securities in 2010 should it see the need. In conjunction with the views of Chicago’s Evans who sees perhaps no change in rates into as far as 2011, investors are today reveling in abundant liquidity and downplaying the prospects for the U.S. dollar. As they do so they are reversing last week’s theme of global slowdown. Equity futures have been propelled higher by this confluence of ways once again sending the dollar down the tubes. Commodity traders so far like what they are seeing so far today. Gold traded at a fresh record peak at $1,167.80 an ounce, while silver traded at its highest in 16 months and copper reached a 14-month high. That’s set the dollar’s ambitious rebound plans of last week back sharply and against the euro it’s trading lower at $1.4968 after having hit a weak spot at $1.4983 earlier in the overnight session. Against the Japanese yen the unit continues to come a marginal second best and the dollar buys ¥88.83. Of course the rally in commodities contrasts sharply with events at the tail end of last week when feint-hearted investors were forced out of long positions in the commodity dollars. The lure of higher yields in risky locations has made the Aussie dollar an appealing prospect. With sell orders driving prices down last week on weaker global recovery prospects, the revision to interest rate expectations helped force many investors’ hands sending the Aussie hurtling close to 90.50 U.S. cents on Friday. However, the altogether brighter growth scenario this morning – although we’re unsure exactly what this looks like – has seen a reemergence of risk appetite that has propelled the Aussie unit all the way back to 92.50 cents. The British pound too is knocking spots off the U.S. dollar and today buys 1.2 more cents than on Friday. At $1.6628 the pound is higher and it also buys ¥147.78 against the Japanese yen. One plausible reason behind a firmer pound today is that investors may well be relying on last week’s strength in retail sales data to deliver a positive upward revision to third-quarter GDP later in the week. The euro rose earlier in the session following a positive slew of reports covering purchasing managers’ intentions. The PMI manufacturing survey at 51, while lower than consensus still indicates expansion while the PMI service sector survey at 53.2 indicates an ongoing health recovery in the sector while the overall composite survey at 53.7 was also above forecast and hints at lesser problems stemming from a strong currency. Source: IB More: FED COMMENTS REVIVE RISK APPETITE

Read the full story

NEW YORK (AP) — A weaker dollar and better-than-expected data on the housing market sent investors moving back into stocks Monday after a three-day losing streak. AP – In this Nov. 19, 2009 photo,Traders work on the floor at the New York Stock Exchange in New … Major stock indexes soared more than 1.5 percent in early trading, including the Dow Jones industrials, which rose about 170 points. A report showing a big jump in home sales reinvigorated investors after disappointing reports on the housing industry last week brought concerns about the strength of the recovery. The National Association of Realtors said home sales rose 10.1 percent in October to the highest level in two and a half years, spurred by a tax credit for first-time homebuyers. Analysts had been expecting a 1.4 percent increase. The credit, which was due to end at the end of the month, was subsequently extended into 2010. Stocks had been rising sharply prior to the report on the back of a weaker dollar. The falling dollar pushed prices for gold, oil and other commodities higher, boosting energy and material stocks. A weaker dollar makes commodities cheaper for foreign buyers. Bond prices fell slightly as investors stepped up their appetite for risk. The dollar retreated as Federal Reserve official James Bullard said the central bank should continue to buy mortgage-backed securities after the program is supposed to expire in March. That would continue to keep interest rates low. Low interest rates and a resulting decline in the dollar have been big drivers behind the stock market’s eight-month rally. Low interest rates enable investors to borrow cheaply and buy assets like stocks and commodities that have the potential to earn higher yields than cash. Stocks fell late last week on worries about the strength of the economy, boosting safe-haven assets like the dollar. Analysts say investors will continue to look for dips in the rally as a way to get into the market, not wanting to end the year without participating in some of the big gains stocks have made this year. The Dow Jones industrial average rose 172.16, or 1.7 percent, to 10,490.32. The Standard & Poor’s 500 index rose 20.25, or 1.9 percent, to 1,111.63, while the Nasdaq composite index rose 41.14, or 1.9 percent, to 2,187.18. Read the r est here: Stocks climb on report showing jump in home sales (AP)

Read the full story

NEW YORK, Nov 23 (Reuters) – U.S. gold futures hit record highs above $1,170 an ounce on Monday, gaining more than 2 percent, as the dollar weakened broadly on expectations that U.S. interest rates would stay low for some time. For the latest detailed report, click on [GOL/]. GOLD * COMEX December gold GCZ9 up $25, or 2.2 percent, at $1,171.80 an ounce at 9:57 a.m. EST (1457 GMT) on the NYMEX. * Range from $1,151.60 to $1,174 — an all-time high. * Gold’s gains accelerate as the dollar extends losses after St. Louis Federal Reserve President James Bullard’s dovish comments on interest rates. [ID:nN22246631] * Market sentiment very positive as gold held firm despite strong dollar and weak oil last week – Barclays. * Technical buying seen after gold ended higher for a third consecutive session on a weekly basis last week. * December $1,200 call strike options set to expire worthless on Monday after COMEX settlement – option traders. * Speculative net long positions in gold provided by CFTC edge lower for a fifth straight week as new short positions emerge – Barclays. * Gold-to-oil ratio at 14.67, down from the previous session’s 14.93, as oil outperforms gold on Monday. * Spot gold XAU= at $1,170.30 an ounce, compared with $1,148.20 late in the previous session in New York. * London’s afternoon gold fix XAUFIX= at $1,169.50 an ounce. * For a gold price interactive graphic: here > SILVER * December silver SIZ9 up 40.5 cent, or 2.2 percent, at $18.845 an ounce, tracking gold’s rally. * Ranged from $18.525 to $18.935 — highest price since July 2008. * Spot silver XAG= was at $18.82, against $18.46 in the previous session in New York. * London silver fix XAGFIX= at $18.76. PLATINUM * January platinum PLF0 up $35.30, or 2.5 percent, at $1,477.20 an ounce as broad-based economic optimism boosts platinum’s autocatalyst demand. * Spot platinum XPT= $1,470.80 an ounce. PALLADIUM * December palladium PAZ9 up $10.10, or 2.8 percent, at $374.45 an ounce on platinum’s strength. * Spot palladium XPD= $371 an ounce. Prices at 10:14 a.m. EST (1514 GMT) Last Change Pct 2008 YTD Chg Close % Chg US gold GCZ9 1172.40 25.60 2.2 884.30 32.6 US silver SIZ9 18.855 0.415 2.3 11.295 66.9 US platinum PLF0 1477.20 35.30 2.5 941.50 56.9 US palladium PAZ9 374.55 10.20 2.8 188.70 98.5 Gold XAU= 1171.95 23.75 2.1 878.20 33.4 Silver XAG= 18.82 0.36 2.0 11.30 66.5 Platinum XPT= 1472.00 31.00 2.2 924.50 59.2 Palladium XPD= 372.30 11.30 3.1 184.50 101.8 Gold Fix XAUFIX= 1169.50 3.50 0.3 836.50 39.8 Silver Fix XAGFIX= 18.76 58.00 3.2 14.76 27.1 Platinum Fix XPTFIX= 1464.00 5.00 0.3 1529.00 -4.3 Palladium Fix XPDFIX= 370.00 0.00 0.0 365.00 1.4 (Reporting by Frank Tang ; Editing by Walter Bagley) ((frank.tang@thomsonreuters.com; +1 646 223 6126; Reuters Messaging: frank.tang.reuters.com@reuters.net)) ((For help: Click “Contact Us” in your desk top, click here [HELP] or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546)) © Thomson Reuters 2009 All rights reserved Original post: U.S. gold hits record $1,174/oz as dollar slides (at Reuters)

Read the full story

SAO PAULO, Nov 23 (Reuters) – Brazilian stocks rose early on Monday as a weak U.S. dollar boosted commodities shares in Latin America’s largest economy. The benchmark Bovespa index .BVSP added 1.4 percent to 67,255.81 in early trading, ready to tally a day of gains after a three-day holiday weekend. Comments from a U.S. Federal Reserve official on Sunday buoyed investor hopes that a looser monetary policy in the world’s largest economy would continue for a while. [ID:nN22246631] Low interest rates in large economies have fueled the carry trade, in which investors borrow money in low-cost countries to invest in higher-yield markets, such as Brazil. That, in turn, has weakened the dollar and strengthened Brazil’s currency, the real ( BRBY ), which has gained about 35 percent so far in 2009. On Monday the real strengthened 0.58 percent to 1.723 per dollar as the greenback slid 0.9 percent against a basket of major currencies .DXY. A weaker dollar also generally helps raw materials. The 19-commodity Reuters-Jefferies index .CRB climbed 1.17 percent on Monday. “The weakening of the dollar and the gain in commodities, helps several emerging markets, including Brazil,” said Andre Luis Querne, a partner at Rio Gestao de Recursos. Nevertheless, he noted, advances in the Bovespa index were “well distributed” among a variety of companies, showing that domestic demand in Brazil was also a strong factor in the country’s economic rebound. “It’s the continuation of international liquidity,” Querne said. “It looks like the markets are still moving higher.” Among heavyweight gainers in the Bovespa index were state-controlled energy giant Petrobras ( PETR4.SA ) and mining company Vale ( VALE5.SA ). Petrobras added 1.6 percent to 39.13 reais as crude oil CLc1 advanced 2.49 percent on the back of the weaker dollar. Vale, the world’s largest producer of iron ore, rose 1.53 percent to 43.15 reais. “Our base case scenario is for a slow recovery in the global economy helping metals demand, with a small but not insignificant risk of a disruption in China. As such, we have an ‘outperform’ rating on iron ore mining companies but recommend a degree of caution,” according to a Bradesco report dated Monday. Steelmakers also gained. Gerdau ( GGBR4.SA ) added 1.38 percent to 28.68 reais, Usiminas ( USIM5.SA ) moved up 1.44 percent to 50.13 reais, and CSN ( CSNA3.SA ) climbed 0.96 percent to 60.80 reais. Shares in retailers rose as well. Lojas Americanas ( LAME4.SA ) saw gains of 1.75 percent to 13.99 reais and Lojas Renner ( LREN3.SA ) climbed 2.08 percent to 37.35 reais.  Continued… Read more: Brazilian stocks, real firm on dollar, commodities (at Reuters)

Read the full story

By Jan Harvey LONDON (Reuters) – Gold hit a record high at $1,170.55 an ounce on Monday as dollar weakness pushed the metal through key technical resistance levels, fuelling momentum buying after the metal’s sharp run higher earlier this month. Spot gold was bid at $1,168.90 an ounce at 8:14 a.m. EST (1418 GMT), against $1,148.20 late in New York on Friday. U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $22.50 to $1,169.30 an ounce. “Gold has a lot of momentum. It is trading off the back of the dollar, and at the moment it seems to be outperforming that trade, as are a lot of other commodities,” said Daniel Major, an analyst at RBS Global Banking & Markets. The precious metal has rallied to a series of record highs since news that India bought 200 tons of gold from the IMF broke in early November. Since then a number of other central banks have announced they too are buying gold. “The main supportive factor outside of the dollar has been various actions by central banks — obviously the buying by India, and since then there has been Russia, and Mauritius,” said Major. The dollar fell broadly on Monday, sliding nearly 1 percent against a basket of six other currencies, after dovish comments from a U.S. Federal Reserve official reinforced the view that U.S. interest rates will stay low for an extended period. Weakness in the U.S. unit boosts gold’s appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies. Oil rose more than 2 percent to above $79 a barrel. Strong oil prices raise the metal’s appeal as an inflation hedge. For a graphic on gold, oil and dollar’s performance, click on: http://feedfetcher.net/wp-content/uploads/2009/11/9b0d032c99IL1109.gif.gif NON-DOLLAR GOLD Gold priced in currencies other than the dollar were also reaching historic highs on Monday, with gold priced in euros rising to a nine-month peak of 780.21 euros an ounce, within 15 euros of a record high. Sterling-priced gold reached a record high of 704.78 pounds an ounce, while gold denominated in Japanese yen rose to a historic peak of 103,788 yen an ounce, according to Reuters data going back to 1987. Elsewhere, options traders are betting gold will hit $1,200 an ounce or higher by early next year. Strong options interest could in turn lift underlying prices further into uncharted territory. On the physical side of the market, Indian gold buying cooled after picking up slightly last week as prices hit record highs and the flow of scrap eased, dealers said. Gold’s gains lifted other precious metals, with platinum hitting its highest since September 2008 at $1,472.50, and silver its strongest since July 2008 at $18.88 an ounce. Spot platinum was later at $1,467.50 an ounce against $1,441, while palladium was at $368.50 against $361. Spot silver was bid at $18.80 an ounce against $18.46. ETF Securities said holdings of its platinum- and palladium-backed exchange-traded commodities rose to record highs on Friday. However, both ETF Securities and Zurich Cantonal Bank said the holdings of their gold-backed exchange-traded products dipped last week. (Additional reporting by Lewa Pardomuan; editing by Keiron Henderson) View original post here: Gold hits record above $1,170/oz as dollar slides

Read the full story

(Repeats Friday story without changes) By Natsuko Waki LONDON, Nov 20 (Reuters) – Trades betting on higher commodities and equities and a weak dollar may see a quick and sharp reversal if a renewed rise in oil prices fans inflation concerns and prompts early exit from ultra-easy monetary policy. These trades exploiting high correlation between the dollar, dollar-priced commodity prices and related shares have been a key feature of the year-end rally as investors grow convinced that policymakers in the developed world would keep interest rates near zero. The dollar has hit a 15-month low against a basket of major currencies .DXY, fuelling gains in dollar-priced commodities. Gold hit an all-time high above $1,152 an ounce XAU= this week, while global commodities benchmark Reuters-Jefferies CRB index .CRB hit a 3-1/2 week peak. For a graphic on correlation trades, click r.reuters.com/cyp72g The only piece missing in this correlation puzzle is crude oil, which has been stuck in range just below $80 a barrel CLc1 and is not making new 2009 highs. Relatively tame oil prices have helped keep inflation concerns in check, allowing policymakers to keep flooding the system with huge liquidity and underpin the economic recovery. Once oil prices take off however, central banks around the world might withdraw this support more quickly than investors think, which would destabilise the correlation trades. “There is loads of cash on the sidelines and there’s been a constant trickle into the market and keeping the tide going,” said Paul Kim, director of portfolio management at FundQuest. “They will keep the foot on for a little bit more but that’s until when inflation risks come in. That’s very worrying for central banks. There is a definite danger.” Next week’s release of the minutes of the Fed’s November meeting would give more clues to their thinking. At their last meeting on November 3-4 Federal Reserve policymakers reiterated a pledge to keep interest rates extraordinarily low for an extended period. Fed officials have been also stressing that inflation is not an immediate threat as a weak economic recovery and a grim outlook for jobs keep price pressures in check. PUMPING IN Investors pumped money into emerging market assets and commodities as the dollar fell in the week ending November 18. Emerging market equity funds attracted just over $2.7 trillion during the week, pushing the total inflows this year to a record $56.8 billion after an outflow of $40 billion in 2008. Commodity funds, which currently account for nearly three-quarters of the inflows into all sector fund groups so far this year, took a record $1.34 billion for the week with year-to-date inflows climbing above $13 billion. Reflecting the lack of a strong rally in oil, energy sector funds posted a modest outflow for the week. The BofA Merrill Lynch monthly fund managers survey showed the net overweight position on commodities stood at a record high of 25 percent this month, while their net equity overweight position also increased slightly from October.  Continued… Read the original post: RPT-GLOBAL MARKETS WEEKAHEAD-Dollar/commods trades under threat (at Reuters)

Read the full story

SEOUL, South Korea (AP) — Asian stock markets were mixed Monday after a decline on Wall Street and as investors hunkered down ahead of a stream of figures that could confirm the U.S. economy is recovering at a slower pace. Trading was subdued with financial markets in Japan closed for a national holiday. Oil hovered above $78 a barrel while the dollar rose against the yen and fell versus the euro. Hong Kong’s Hang Seng index was up 140.15 points, or 0.6 percent, at 22,588.44 while South Korea’s Kospi was off 2.72, or 0.2 percent, at 1,617.88. Elsewhere, Australia’s index gained 0.6 percent and China’s Shanghai benchmark rose 0.1 percent. Markets were lower in Indonesia, Malaysia, Thailand, New Zealand and the Philippines. Investors are cautious because of an upcoming slew of figures on the world’s largest economy including revised GDP growth for the third quarter. Many analysts expect the initial estimate of a 3.5 percent annual growth rate to be lowered. Also due this week are reports on home sales, unemployment, consumer confidence and demand for big-ticket manufactured goods. “Everybody is watching to see if the U.S. consumer will go out and spend,” said Jackson Wong, vice president at Tanrich Securities in Hong Kong. There’s also a focus on the U.S. dollar, he said, after it regained strength amid safe haven buying sparked by Dell’s gloomy business outlook and European Central Bank plans to start reining in stimulus programs. Investors tend to seek refuge in the U.S. currency and gold when they perceive other assets such as emerging market stocks and commodities have become too risky. Stocks, particularly in Asia, have risen dramatically from their lows in March but there are nagging doubts the global economic recovery isn’t keeping up with the markets. On Friday in New York, the Dow Jones industrial average fell 14.28, or 0.1 percent, to 10,318.16, skidding for the third straight session. For the week, the Dow fell 119 points, or 1.1 percent. The broader Standard & Poor’s 500 index fell 3.52, or 0.3 percent, to 1,091.38, while the Nasdaq composite index, dominated by tech stocks like Dell Inc., fell 10.78, or 0.5 percent, to 2,146.04. Investors sold U.S. stocks after Dell said net income dropped 54 percent in the third quarter and warned it faced an uneven recovery. Oil prices rose with benchmark crude for January delivery up 73 cents at $78.20 on the New York Mercantile Exchange. The contract lost 58 cents to settle at $77.47 on Friday. In currencies, the dollar rose to 88.88 yen from 88.79 yen. The euro rose to $1.4937 from $1.4859. Visit link: Asia stocks mixed as figures on US economy awaited (AP)

Read the full story

NEW YORK (AP) — Investors are heading toward the final month of the year with more questions about the economy than they had just a few weeks ago. The uncertainty, which follows some downbeat reports on housing and employment, will likely mean choppy trading, especially as volume dwindles during the holiday season. In this week, which will be abbreviated due to Thanksgiving, investors will look to reports on home sales, unemployment and consumer confidence and the start of the holiday shopping season on Friday for more insight into the direction of the economy. The government also will revise its early estimate of the gross domestic product that said the economy grew at an annual pace of 3.5 percent during the third quarter. Many analysts now expect a smaller increase in GDP because of recent reports on housing and retail sales. If more reports signal a slow economic rebound, investors could continue selling stocks and buying safe-haven assets like the dollar and short-term Treasurys, as they did last week. Stocks fell from 13-month highs during the latter half of last week on disappointing housing reports and worries about a slump in demand at technology companies. The Dow Jones industrials ended the week with a paltry 0.5 percent gain, while broader indexes finished with losses. And the three-month Treasury bill’s yield briefly turned negative, which meant that investors were willing to in effect pay the government to park their cash in a safe place. Investors have again become more cautious about risk after months of taking advantage of record low interest rates to borrow cheaply and pump money into stocks and commodities. Uneven reports showing small improvements in some industries like manufacturing but still weak numbers in areas like employment and housing, have investors worried that the recovery will be slow and subdued. Not wanting to risk losing the big gains they’ve amassed since March, investors are locking in profits and padding their portfolios with more safe havens. “It’s a two steps forward, one step back continuum here,” said Matt Lloyd, chief investment strategist at Adivsors Asset Management. “The economy is recovering, but not in every area.” Still, the market’s moves have been orderly, and analysts say that some consolidation is warranted, even healthy, after a 61.3 percent rise in the Standard & Poor’s 500 index since early March. “At some point, you’ve got to have that shift from enthusiasm over what was based on unquestionably good news, back to the recognition that this can’t keep up indefinitely,” said Jim Baird, partner and chief investment strategist at Plante Moran Financial Advisors. Concerns over the direction of the dollar and when the Federal Reserve might raise interest rates could put more pressure on stocks through the end of the year. With anxiety about the economy running high, demand for the dollar may increase. A stronger dollar is bad for commodities producers and exporters because it makes their goods and services more expensive overseas. And U.S. companies that do business in foreign markets make less money when their earnings are translated from other currencies into dollars. But the Fed has pledged to keep interest rates low for the foreseeable future to support the economy’s recovery, which should keep a lid on the dollar for the time being. Still, the dollar is sensitive to many outside forces. Last week, the dollar got a boost after European Central Bank President Jean-Claude Trichet said the ECB plans to start reining in some of its stimulus programs. Which direction stocks and the dollar take next depends on what this week’s reports have to say about the economy. Many analysts are expecting the data to continue to be mixed, which could lead to erratic trading. “I wouldn’t be surprised to see back and forth (trading),” Lloyd said. “When you have that much data, you usually bounce around.” The week will start with figures on September home sales from the National Association of Realtors. Also Monday, investors will likely keep a close watch on quarterly figures from computer and printer maker Hewlett-Packard Co. for any signs of improving demand after a disappointing outlook from Dell Inc. last week. The following day, the Commerce Department will release its revised GDP figure. Investors will also get the Standard & Poor’s/Case-Shiller index on home prices for September and the third quarter, as well as the Conference Board’s reading on consumer confidence for November. Additionally, the Federal Reserve will issue the minutes from its most recent policy meeting. Wednesday brings government reports on durable goods orders, personal income and spending and new home sales, as well as the Labor Department’s weekly report on initial claims for jobless benefits. And Friday marks the start of the holiday shopping season. The day after Thanksgiving, commonly known as Black Friday, is traditionally considered the day when a surge of shoppers pushes retailers into the black for the year. While retail sales have shown some improvement, forecasts for this year’s holiday season are conservative. Analysts expect intense competition among retailers as they struggle to attract shoppers who are still worried about losing their jobs and paying their bills. Original post: Investors look to data-heavy week for more clarity (AP)

Read the full story

NEW DELHI, NOV. (Reuters) – Indian Prime Minister Manmohan Singh said on Sunday there was no substitute to the U.S. dollar for replacement as the global reserve currency. Reuters – India’s Prime Minister Manmohan Singh speaks during the three-day long India Economic Summit 2009 at the World Economic … “As far as I can see there is no substitute for the dollar,” Manmohan Singh told CNN International television in an interview, coinciding with his trip to the United States. “My own feeling is that we have not entered an era of irreversible shift in economic strength of the United States,” Singh said during the interview. “Chinese are hesitant from the fact that they own 2.5 trillion dollars of reserve assets. They have not disposed even a fraction of them,” Singh added. China allowed the yuan to rise 21 percent against the dollar between July 2005 and July 2008 before effectively repegging the yuan to help its exporters cope with a slump in global demand. Beijing now faces mounting international calls to let the yuan, or “renminbi,” rise on the grounds that it is undervalued and stoking imbalances with other big economies, but it showed no public sign of budging during last week’s visit by U.S. President Barack Obama. India had said in July that it welcomed discussions on replacement of the dollar, along with China, France and Russia who wanted a debate on the issue. The dollar rose for a second straight session last Friday as investors cut exposure to risky assets and high-yield currencies ahead of a holiday-shortened week in the United States. (Reporting by Bappa Majumdar; Editing by Jon Loades-Carter) Here is the original post: Indian PM says no substitute for U.S. dollar: report (Reuters)

Read the full story

NEW YORK (AFP) – Oil prices remained depressed Friday amid a strengthening dollar and concerns over sustainable economic recovery. New York’s main contract, light sweet crude for December delivery, dropped 74 cents to end the week at 76.72 dollars after slumping by more than two dollars on Thursday. London’s Brent North Sea crude for January delivery lost 44 cents to 77.20 dollars. Traders said oil investors tracked the global stock and foreign exchange markets as they weighed prospects for next week. Shares continued to give up gains in Asia, Europe and the United States on corporate and economic recovery worries. In Japan, investors were worried that a long bout of falling consumer prices could threaten the world’s second largest economy’s recovery from its worst recession in decades and eat into corporate profits and prompted consumers to put off purchases. US economic data this week also did little to soothe recovery concerns, pulling down Wall Street shares. Fresh data showed slightly hotter-than-expected reading of prices at the consumer level, a smaller-than-expected increase in industrial production, unexpected declines in both housing starts and building permits, and a jobless claims report that failed to drop below the 500,000 mark as some had hoped. The oil market “followed the stock market and the dollar,” said analyst Andy Lipow of Lipow Oil Associates. The dollar, a safe haven currency, rallied Friday as investors shunned assets viewed as risky, such as the euro and stocks, on fresh concerns about the strength of global economic recovery. A higher dollar makes greenback-denominated commodities such as crude oil more expensive for buyers using other currencies. Supply concerns also dogged the market. Lipow particularly cited high distillate inventories in the United States, the world’s largest energy consuming nation. The US government weekly inventory data showed that stockpiles of distillates, which include diesel and heating fuel, fell 300,000 barrels in the previous week. Analysts had pencilled in a bigger drop of 500,000 barrels. “In the near term, we have a huge oversupply, and the weather forecast for this winter has been changing towards either normal or warmer than normal type of season (and) if that happens, we will exit the winter with huge amount of distillate inventories and that would be bearish for the oil market,” he said. New York crude prices on Wednesday breached 80 dollars a barrel after data showed crude reserves in the United States fell 900,000 barrels in the week ending November 13. Meanwhile, OPEC president Jose Maria Botelho de Vasconcelos has signalled that 75-80 dollar oil is an adequate level to allow for a global economic recovery. The Organization of Petroleum Exporting Countries (OPEC) pumps about 40 percent of the world’s oil. Go here to see the original: Oil prices wobble on recovery concerns

Read the full story

* Dollar up for second straight day as risk appetite fades * Stocks decline, banks park funds in Treasuries * High-yielders such as Australian dollar fall (Recasts, updates prices, adds comment, changes byline) By Nick Olivari NEW YORK, Nov 20 (Reuters) – The dollar rose for a second straight session on Friday as risk tolerance declined, with investors cutting exposure to assets and currencies perceived as higher risk ahead of a holiday-shortened week in the United States. European and U.S. shares declined alongside oil, gold and high-yield currencies such as the Australian dollar. The dollar is down some 14 percent since mid-March as signs of a global recovery prompted investors to favor higher-yield currencies and assets. Expectations for U.S. interest rates to remain at record low levels into 2010 have also hurt the greenback. “It’s been a very good year for a lot of people, and it makes sense that players are going to square up positions today ahead of the U.S. holiday and month-end,” said Michael Woolfolk, strategist at BNY Mellon in New York. U.S. markets will be shut next Thursday for Thanksgiving with many traders and investors also taking Friday off as vacation, while Monday marks a national holiday in Japan. The dollar was off highs for the day but still firmer against most major currencies. The euro fell 0.4 percent to $1.4863 EUR= after touching a two-week low of $1.4800. Against the yen, the dollar slipped 0.1 percent to 88.95 yen JPY= while the euro fell below and then hovered around its 200-day moving average near 132.10 yen EURJPY=. Reaction was muted as the Bank of Japan kept interest rates at a record low 0.1 percent, as expected, and upgraded its assessment on the economy. Sterling shed almost 1 percent to $1.6500 GBP= and the Australian dollar lost 0.6 percent to $0.9138 AUD= , near an earlier two-week low. It was headed for a 2.2 percent decline this week at current prices. ANXIOUS INVESTORS Some analysts said investors wanted to see more evidence that the world economy is back on track before blindly buying risky assets in the hope of higher returns.[ID:nDEG003583] European Central Bank President Jean-Claude Trichet said on Friday it was premature to declare the financial crisis over, as he warned that banks risk becoming addicted to the cheap money from emergency government stimulus programs and must be prepared for its withdrawal. [ID:nLK354566]  Continued… See the article here: FOREX-Dollar advances; traders trim risk exposure (at Reuters)

Read the full story

By Wanfeng Zhou NEW YORK, Nov 20 (Reuters) – The dollar could resume its decline in a holiday-shortened week as expectations U.S. interest rates will remain low for some time prompt investors to buy assets and currencies with higher yields elsewhere. The dollar’s downtrend was interrupted in recent days as renewed worries about a global economic recovery pressured stocks and commodities and revived safe-haven demand. But analysts say the trend for a lower dollar stays intact. Despite the Thanksgiving holiday on Thursday, a relatively heavy dose of economic data will be released next week, highlighted by preliminary U.S. gross domestic product for the third quarter. The minutes from the Federal Reserve’s November meeting will also grab investors’ attention. U.S. markets will be shut on Thursday, while Monday marks a national holiday in Japan. The U.S. stock and bond markets will close early on Friday. “Overall, the broader weaker U.S. dollar trend is still intact and we haven’t really seen anything that would imply that’s come to an end,” said Camilla Sutton, currency strategist at Scotia Capital in Toronto. “We’re still in a period of supporting growth almost at any cost and it’s too early for (an) exit. I think that’s an environment where the U.S. dollar should weaken.” The dollar has advanced 0.7 percent against a basket of currencies .DXY this week, while high-yield currencies such as the Australian dollar fell as investors took profits on a sharp rally in riskier assets over the past few months. Despite this week’s gains, the dollar index remains about 14 percent lower from highs set in March. On the week, the euro fell 0.6 percent against the dollar EUR= . The yen strengthened this week, with the greenback down 0.7 percent JPY= at current prices. Besides GDP, currency investors will also watch data on the housing, consumer and manufacturing sectors of the U.S. economy, including new and existing home sales, personal income and consumption, and durable goods orders. A series of Treasury auctions in two-, five- and seven-year notes totaling $118 billion next week will also be in focus. Any weakness in the percentage of indirect bidders, a category that includes foreign central banks, may heighten worries about the dollar, analysts say. EURO NERVOUSNESS While the low borrowing costs in the United States continue to work against the dollar, the market has also become nervous about the euro. “It has not embraced the euro in its own right, but rather has moved toward the euro because it is not the dollar and is the liquid alternative,” said Marc Chandler, global head of currency research at Brown Brothers Harriman in New York. That trend is evident in the options market, Chandler said, where the premium being paid for euro puts over euro calls made a new high for the year on Friday at 1.19 percent. In contrast, he said, in early June the market was paying a similar premium, but for euro calls not puts.  Continued… Continued here: FX OUTLOOK-U.S. dollar may resume decline next week (at Reuters)

Read the full story

NEW YORK (AP) — The stock market lost ground for a third straight day as investors grew uneasy about a rising dollar and spiking demand for the safest government debt. AP – In this Nov. 19, 2009 photo, a Trader works on the floor at the New York Stock Exchange … {”s” : “dell,dhi,dvn”,”k” : “c10,l10,p20,t10″,”o” : “”,”j” : “”} A disappointing earnings report from computer maker Dell Inc. weighed on technology shares Friday and hurt the Nasdaq composite index. Demand for safe havens rose following Dell’s report and as European Central Bank President Jean-Claude Trichet said the ECB plans to start reining in some of its stimulus programs. Hiking borrowing rates could help keep inflation in check but could also slow improvement in the economy. Investors seeking safety pushed into the dollar. A strengthening dollar curtails foreign demand for commodities, which are traded in dollars. It also can depress U.S. exports, which become more expensive as the dollar rises. The advancing dollar hurt energy and materials stocks, which are closely tied to commodities. Investors looked for stable government investments. The yield on the three-month T-bill, which moves opposite its price, fell to 0.01 percent from 0.02 percent late Thursday. It stands near its lowest level of the year, which it hit Thursday. Yields briefly turned negative Thursday as investors seeking to pad their portfolios with safe investments before the end of the year were willing to accept losses. “Investors seem to need a constant reassurance with where we are in the economic recovery,” said Brett D’Arcy, chief investment officer at CBIZ Wealth Management Group in San Diego. “We just haven’t gotten it in the past few days.” In early afternoon trading, the Dow Jones industrial average fell 42.47, or 0.4 percent, to 10,289.97. The Dow fell 105 points, or 1 percent, in the past two days. The broader Standard & Poor’s 500 index fell 6.28, or 0.6 percent, to 1,088.62, while the Nasdaq fell 18.64, or 0.9 percent, to 2,140.40. The ICE Futures US dollar index, which measures the dollar against other major currencies, rose 0.5 percent. Demand for longer-term Treasurys fell, pushing yields higher. The yield on the benchmark 10-year note fell to 3.36 percent from 3.34 percent. D’Arcy said he expected stocks would slide Friday because of economic numbers that arrived during the week. Reports Wednesday and Thursday showing a drop in housing starts and a jump in mortgage delinquencies upended an advance that had been all but unbroken in November. Those figures brought worries that an economic recovery will be slow and bumpy. Concerns about the pace of a recovery have dogged the market’s eight-month rally but with the nation’s unemployment rate now above 10 percent for the first time in 26 years and new worries about housing, some analysts say investors have raced too far ahead of a recovery in the economy. Even if stocks can manage to climb in the final six weeks of the year, some traders are worried that there will be little to propel the market higher in 2010 if worries about jobs, housing and consumers don’t ease. Investors got the type of downcast news from Dell that suggests a recovery could be uneven. The company said sales of its computers to big businesses remain sluggish. Its quarterly revenue and profit missed analysts’ expectations. The stock fell $1.51, or 9.5 percent, to $14.36. Meanwhile, D.R. Horton Inc.’s quarterly loss narrowed as the homebuilder booked smaller write-downs on its inventory. Even as its losses shrank, revenue fell 42 percent as the housing market remained unsteady. The stock fell $1.89, or 15.4 percent, to $10.36. Energy companies logged some of the biggest drops as crude oil fell 76 cents to $76.70 per barrel on the New York Mercantile Exchange as the dollar rose. Gold rose. Independent oil and gas producer Devon Energy Corp. fell $2.05, or 3 percent, to $67.12. Three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 662.2 million shares compared with 547.1 million shares traded at the same point Thursday. The Russell 2000 index of smaller companies fell 4.58, or 0.8 percent, to 581.10. Overseas, Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index lost 0.7 percent, and France’s CAC-40 dropped 0.8 percent. Japan’s Nikkei stock average fell 0.5 percent. Read more: Stocks fall for 3rd day as dollar strengthens (AP)

Read the full story

NEW YORK (AP) — The safe-haven dollar kept rising Friday and Treasury yields hovered around their lows for the year as worries about the economy in 2010 continued to weigh on traders’ taste for risky bets. After Lehman Brothers went bankrupt in September 2008, setting off a global financial crisis, the dollar got a huge boost. Investors flooded into the dollar and Treasurys as stocks and commodity prices tumbled worldwide. The greenback has now given back all of those gains since the stock market rally in March. “Once we got there, we got the question: Where does U.S. dollar go now?” said David Watt, senior currency strategist at RBC Capital in Toronto. Investors are not as willing to take on risk right now as they were in spring, he said, which could be a prop up for the greenback. There is a chance the euro has peaked slightly above $1.50, said Bob Sinche, independent global strategist and former head of global foreign exchange strategy at Bank of America, even though there’s not much demand for dollars outside of the lure of safety. Big investors winding down their books for the year may also give the dollar a boost. On Friday, the 16-nation euro dropped to $1.4864 in midday trading in New York from $1.4919 late Thursday. Earlier this morning, the euro dipped below $1.48 for the first time since Nov. 3. Meanwhile, the British pound tumbled to $1.6505 from $1.6647, while the dollar dipped to 88.97 Japanese yen from 89.01 late Thursday in New York. The dollar had jumped on Thursday as investors sought safe havens following disappointing U.S. economic data. The government reported that jobless claims for the newly unemployed remained high, and another report showed more homeowners sinking into foreclosure. The Conference Board, a private research group, said its forecast of economic activity grew, but analysts said momentum was dropping and the U.S. would have slow, bumpy growth next year. Weaker economic news can support the dollar as investors cut their bets on more volatile stocks, commodities and emerging-market currencies and buy up the dollar and short-term U.S. Treasurys. The yield on the three-month T-bill circled zero. On Friday afternoon, the T-bill gave a 0.02 percent return after falling as low as 0.005 percent late Thursday, its weakest level in a year. Meanwhile, the Dow Jones industrials were down about 44 points at midday. But other analysts cautioned that two days of a stronger dollar didn’t make a trend. “There’s not a lot to speak well for the dollar,” said Sinche. The big trade deficit in the U.S. and record U.S. budget deficits, along with rock-bottom interest rates near zero for what the Federal Reserve says is an “extended period” have investors looking askance at the buck. Super-low interest rates make a currency less attractive, and investors tend to transfer funds to assets that earn higher returns. In other trading, the dollar rose to 1.0188 Swiss francs from 1.0133 francs, and gained to 1.0701 Canadian dollars from 1.0626. “Right now, traders are poised to buy dollars and sell euros,” said David Gilmore of Foreign Exchange Analytics in Essex, Conn. That’s the way trading momentum is at the moment as some investors start to worry about problems in the U.S. economy next year, he said. But “the bar is pretty high to throw in the towel on being long risk.” Follow this link: Dollar keeps gaining as traders pare risk exposure (AP)

Read the full story

It looks like the Europeans are going to grab the reigns from Mr. Bernanke.  This should put a wrinkle in the global reflation trade.  This morning’s FX View from IB : The ECB’s omnipresent desire to avoid the pitfalls of inflation caused by excessive money growth caused its president, Jean Claude Trichet to serve up a warning earlier this morning that it must pursue an exit strategy. His words, while not exactly new, turned a mediocre equity market recovery on its head and have caused a surge in the value of the dollar at the prospect of a further amelioration of growth. The euro tumbled half a penny to $1.4808 while dollar gains are evident across the board. Mr. Trichet said that the ECB should gradually withdraw the emergency cash loans to the domestic banking system made during a time when a special situation demanded it. He seemed to be prescribing a clinical weaning program in order to prevent the private sector from becoming more addicted to the exceptional support provided by central banks. Yet as that process begins in December when the one-year maturity date comes due Mr. Trichet fully admits that, “It’s too early to declare that the crisis is over.” Referring to the recently improved health of the financial system he said that a “significant volume of official support underlies these developments.” This appears to be what is rattling markets this morning. While investors have spent the week rolling out lower-for-longer interest rate expectations, they are starting to get cold feet over the health of asset market rallies taking the line that stocks have come too far too soon and that if – only for safety’s sake – they should perhaps hold onto their dollars after all. The earlier tone was one of strength for the Japanese yen. The Nikkei Dow closed down for its fourth straight weekly loss with exporting companies complaining about the currency’s impact on overseas earnings. Meanwhile the Bank of Japan maintained its uncomfortable position sitting on a knife-edge. It credited a near-term improvement in the economy on its low interest rate setting at 0.1%, which it agreed to maintain at its meeting today. However, it also discussed the problematic acceleration of deflationary pressures that emerged alongside strengthening growth this week. According to the central bank the economy is suffering a mild deflationary phase due to weak corporate and domestic demand. In order to squeeze this unwanted process out of the economy, it urged the government to boost growth expectations and spending. For the government’s part it wants that Bank to buy more corporate bonds to add liquidity to the market. But as we all know, you can take a horse to water, but you can’t make it drink. The upshot against a backdrop of weakening risk appetite in the region was for a stronger yen. It rallied sharply to the dollar to ¥88.67 before giving some back as the dollar moved from an early morning jpg to a sprint. The yen is currently at ¥89.00. Meanwhile the euro dropped to ¥131.93. The British pound slumped to its lowest reading since November 4th to $1.6460 as the dollar flexed this morning. Since that time the pound rose to $1.6876 as investors bought into an extension of the asset purchase plan announced by the Bank of England. Subsequent worries over the health of the banking system and fresh warnings today for the value of home prices are cramping its style today. The rising threat of capital controls across Asian nations whose governments reside over booming capital markets funded by cheap dollar loans is reaching a crescendo. So not only do we have an ongoing discussion over the absolute health of the global recovery, not to mention the outlook into 2010, but we also have worries that the side effects of the G7 solution is creating bubbles in asset prices across the emerging markets. The commodity dollars are taking this combination pretty hard, especially the Australian dollar, which has also matched the reversal seen in the British pound. At 90.91 U.S. cents the Aussie is well off its November peak at 94.00 cents. Meanwhile the Canadian dollar is feeling the risk aversion sentiment too as it declines to 93.35. Source: IB Read more: TRICHET COMMENTS REVERSE THE RISK TRADE

Read the full story

By Natsuko Waki LONDON, Nov 20 (Reuters) – Trades betting on higher commodities and equities and a weak dollar may see a quick and sharp reversal if a renewed rise in oil prices fans inflation concerns and prompts early exit from ultra-easy monetary policy. These trades exploiting high correlation between the dollar, dollar-priced commodity prices and related shares have been a key feature of the year-end rally as investors grow convinced that policymakers in the developed world would keep interest rates near zero. The dollar has hit a 15-month low against a basket of major currencies .DXY, fuelling gains in dollar-priced commodities. Gold hit an all-time high above $1,152 an ounce XAU= this week, while global commodities benchmark Reuters-Jefferies CRB index .CRB hit a 3-1/2 week peak. The only piece missing in this correlation puzzle is crude oil, which has been stuck in range just below $80 a barrel CLc1 and is not making new 2009 highs. Relatively tame oil prices have helped keep inflation concerns in check, allowing policymakers to keep flooding the system with huge liquidity and underpin the economic recovery. Once oil prices take off however, central banks around the world might withdraw this support more quickly than investors think, which would destabilise the correlation trades. “There is loads of cash on the sidelines and there’s been a constant trickle into the market and keeping the tide going,” said Paul Kim, director of portfolio management at FundQuest. “They will keep the foot on for a little bit more but that’s until when inflation risks come in. That’s very worrying for central banks. There is a definite danger.” Next week’s release of the minutes of the Fed’s November meeting would give more clues to their thinking. At their last meeting on November 3-4 Federal Reserve policymakers reiterated a pledge to keep interest rates extraordinarily low for an extended period. Fed officials have been also stressing that inflation is not an immediate threat as a weak economic recovery and a grim outlook for jobs keep price pressures in check. PUMPING IN Investors pumped money into emerging market assets and commodities as the dollar fell in the week ending November 18. Emerging market equity funds attracted just over $2.7 trillion during the week, pushing the total inflows this year to a record $56.8 billion after an outflow of $40 billion in 2008. Commodity funds, which currently account for nearly three-quarters of the inflows into all sector fund groups so far this year, took a record $1.34 billion for the week with year-to-date inflows climbing above $13 billion. Reflecting the lack of a strong rally in oil, energy sector funds posted a modest outflow for the week. The BofA Merrill Lynch monthly fund managers survey showed the net overweight position on commodities stood at a record high of 25 percent this month, while their net equity overweight position also increased slightly from October. And inflows into equities and commodities are driven by investors taking money out of low-yielding money market funds. U.S. money market funds saw an outflow of $50.41 billion this month alone, pushing their assets down to $3.29 trillion in the week ended November 17, according to the Money Fund Report.  Continued… See the original post: GLOBAL MARKETS WEEKAHEAD-Dollar/commods trades under threat (at Reuters)

Read the full story

LONDON (AFP) – Oil prices dropped on Friday and were likely to stay under 80 dollars because of high energy inventories in the United States, the world’s biggest energy-consuming nation, analysts said. New York’s main contract, light sweet crude for December delivery, fell 21 cents to 77.25 dollars a barrel after slumping by more than two dollars on Thursday. Brent North Sea crude for January delivery lost 13 cents to 77.51 dollars in early London trading on Friday. Prices slid “with relatively swollen US stockpiles still weighing,” said VTB Capital commodities analyst Andrey Kryuchenkov in London. New York crude prices on Wednesday breached 80 dollars a barrel after government data showed crude reserves in the United States fell 900,000 barrels in the week ending November 13. However levels remain relatively high with demand struggling to recover following the financial crisis. Oil prices slumped on Thursday as the dollar rose and owing to renewed doubts about a sustainable global economic recovery, traders said. An array of largely unimpressive US economic data caused a fall on Wall Street as investors sought safety in the dollar, a traditional safe haven currency in times of distress. A stronger greenback makes dollar-denominated commodities — like crude oil and gold — more expensive for buyers using other currencies. That tends to reduce demand for such raw materials, eventually weighing on prices. Oil under 78 dollars a barrel was “a buying opportunity,” said analyst Victor Shum at the Purvin and Gertz energy consultancy in Singapore. “The oil market has shown resistance against breaking through the 80-dollar level simply because the sustainability of economic recovery.” They were also struggling to find support owing to strong supplies and weak demand, he added. In a volatile week for markets generally, crude oil prices soared 2.50 dollars on Monday owing to a weak dollar and data showing that the Japanese economy expanded 1.2 percent in the July-September period, traders said. It was the second straight quarter of expansion in the world’s second-largest economy. Meanwhile, OPEC president Jose Maria Botelho de Vasconcelos has signalled that 75-80 dollar oil is an adequate level to allow for a global economic recovery. The Organization of Petroleum Exporting Countries (OPEC) pumps about 40 percent of the world’s oil. The oil market has also this week followed events in oil-exporter Nigeria, where its main armed group has accused the military of staging a dawn raid on a village in the restive crude-producing region, saying it could threaten peace talks. Read more: Oil prices mixed as inventories stay high

Read the full story

By The Associated Press SINGAPORE – Oil prices hovered below US$78 a barrel Friday in Asia as investors eyed a volatile U.S. dollar and mixed economic data. Benchmark crude for December delivery was up 11 cents to $77.57 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract, which expires later on Friday, gave up $2.12 to settle at $77.46 on Thursday. Oil has seesawed between $76 a barrel and $82 for about a month as the dollar – whose fall this year has help boost crude prices from $32 in December – stabilized somewhat during the last few weeks. Investors often buy commodities such as oil as a hedge against a weaker dollar and inflation. The euro fell to $1.4900 from $1.4922 late Thursday in New York while the dollar slipped to 88.88 yen from 88.98. “We view this sideways pattern as sustainable going forward through the balance of this year,” said Galena, Illinois-based Ritterbusch and Associates said in a report. “But, bearish oil fundamentals that are showing negligible sign of improvement will accentuate downside price moves in response to a strengthening dollar while dampening upside reaction to a weakening dollar.” On Thursday, the U.S. Labour Department said employers are still shedding jobs, and the Mortgage Bankers Association reported a surge in foreclosures. However, some analysts expect Asian economic growth, led by China, to help offset a sluggish recovery in developed countries. In other Nymex trading, heating oil was steady at $2.00 a gallon. Gasoline for December delivery held at $1.98 a gallon. Natural gas for December delivery was steady at $4.34 per 1,000 cubic feet. In London, Brent crude for January delivery rose 36 cents to $78 on the ICE Futures exchange. – TSX:ECA, TSX:IMO, TSX:SU, TSX:HSE, NYSE:BP, NYSE:COP, NYSE:XOM, NYSE:CVX, TSX:CNQ, TSX:TLM, TSX:COS.UN Read the r est here: Oil hovers below $78 in Asia as investors look at US dollar, economy

Read the full story

By Jeremy Gaunt, European Investment Correspondent Reuters – A pedestrian walks along a side street in Seoul November 20, 2008. REUTERS/Jo Yong-Hak … LONDON (Reuters) – Financial markets saw a rare breakdown in correlations on Friday with world stocks eking out modest gains after the previous sessions losses but the dollar strengthening. In recent months, the U.S. currency and equities have worked almost in reverse tandem, with the former getting hit every time risk appetite bolsters the latter. Investors are heading toward year-end seeking firm proof that the global economy is rebounding rather than just not getting worse. But at the same time there is a strong tendency to want to lock in profits. This may be having some effect on the dollar, which has benefited from the profit booking in higher-yielding currencies. “Hedge funds are cashing out their positions to prepare for year-end redemption requests from their clients. And that move is encouraging others to take profits as well,” said the head of a trading desk at a big Japanese bank. As a result, the dollar was steady to slightly higher against a basket of major currencies ( ^DXY – News ). The euro slipped slightly to $1.4906 and Britain’s pound was down a third of a percent at $1.6609. Also breaking with current patterns, the steady dollar did not push gold lower. It was up slightly at $1,145 an ounce, albeit about $7 off its record high reached on Wednesday. Gold tends to rise when the dollar falls because the metal becomes cheaper to non-dollar investors. EUROPEAN STOCKS BOUNCE MSCI’s all-country world index (.MIWD00000PUS> was up 0.1 percent after a 1.6 percent fall on Thursday. It was heading for a small weekly loss despite hitting a year high on Monday. “We’re still stuck in a tight range, and this could last until December,” said David Thebault, head of quantitative sales trading at Global Equities in Paris. European shares rebounded from the previous session’s sharp falls and snapped a three-day losing run, aided by gains in commodity stocks. The FTSEurofirst 300 ( ^FTEU3 – News ) index of top European shares was up 0.4 percent after losing 1.6 percent on Thursday. Earlier, Japan’s Nikkei (Osaka: ^N225 – News ) fell 0.5 percent and logged its first four-week losing streak in over a year. Euro zone government bonds were little changed. (Additional reporting by Dominic Lau and Satomis Noguchi; Editing by Andy Bruce) See original here: World stocks and dollar both gain (Reuters)

Read the full story

* World stocks and dollar rise * Europe stocks gain, Japan lower * Bonds steady By Jeremy Gaunt , European Investment Correspondent LONDON, Nov 20 (Reuters) – Financial markets saw a rare breakdown in correlations on Friday with world stocks eking out modest gains after the previous sessions losses but the dollar strengthening. In recent months, the U.S. currency and equities have worked almost in reverse tandem, with the former getting hit every time risk appetite bolsters the latter. Investors are heading towards year-end seeking firm proof that the global economy is rebounding rather than just not getting worse. But at the same time there is a strong tendency to want to lock in profits. This may be having some effect on the dollar, which has benefitted from the profit booking in higher-yielding currencies. “Hedge funds are cashing out their positions to prepare for year-end redemption requests from their clients. And that move is encouraging others to take profits as well,” said the head of a trading desk at a big Japanese bank. As a result, the dollar was steady to slightly higher against a basket of major currencies .DXY. The euro slipped slightly to $1.4906 EUR= and Britain’s pound was down a third of a percent at $1.6609 GBP= . Also breaking with current patterns, the steady dollar did not push gold lower. It was up slightly at $1,145 an ounce XAU=, albeit about $7 off its record high reached on Wednesday. Gold tends to rise when the dollar falls because the metal becomes cheaper to non-dollar investors. EUROPEAN STOCKS BOUNCE MSCI’s all-country world index (.MIWD00000PUS> was up 0.1 percent after a 1.6 percent fall on Thursday. It was heading for a small weekly loss despite hitting a year high on Monday. “We’re still stuck in a tight range, and this could last until December,” said David Thebault, head of quantitative sales trading at Global Equities in Paris.  Continued… Read more from the original source: GLOBAL MARKETS-World stocks and dollar both gain (at Reuters)

Read the full story